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Decide on how much capital the system of multilateral development banks (MDBs) and regional development banks (RDBs) needs. Achieving the Sustainable Development Goals (SDGs) will require trillions of dollars annually of support to developing countries. The hoped-for scaling up of private sector resources has not (yet) materialized. At the same time, increasing numbers of developing countries are getting into debt difficulties. Rather than doling out lending power institution-by-institution and summing up the results, the G20 should build an international consensus on what the size of the MDB/RDB system should be, then talk about how those funds are distributed and what risk tolerance should be within and across the MDB/RDB system. Given that several capital increase proposals are pending, this work needs to be complete during the next 12 months.

Consolidate the thematic funds into the regular capital/funding of the MDBs/RDB. As new international mandates have arisen, the international community has tended to fund them through ad hoc pots of money administered by the World Bank or RDBs. While such a tasking by certain shareholders or interested parties may be appropriately responsive to short-term emergency challenges, over time it can dilute an institution’s core mandate, erode managerial oversight, and lead to confusion as to where responsibility lies, if anywhere. If the short-term imperatives are in fact long-term challenges, the mandate to act should be given to one of the MDBs along with the permanent funds to address it.

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Create a system-wide fund to help MDBs/RDBs take more risk and mobilize more private capital. Meeting SDG finance needs will require MDBs to do much better on the amount of private capital mobilized per dollar of MDB commitments. Capitalizing an off-balance sheet fund that uses blended finance to unlock finance seeking market returns would help make MDB finance more catalytic. And access to the fund could be structured to give incentives to MDBs to work together for greater scale. My colleague, Nancy Lee, has put forward a detailed proposal in this regard.

Get guarantee mechanisms to work. The EPG preliminary report rightly notes the need for “a programmatic approach to risk guarantees as distinct from the current project-by-project approach.” Research by our colleagues at the Milken Institute points to a mismatch between regulations governing private financial institutions (e.g., Basel guidelines) and development guarantees. Bringing the bank regulators into a constructive discussion with the MDBs/RDBs to clear the brush will perhaps be a complex undertaking, but the systemic risk posed by ramped up financing of developing countries is unlikely to be large. The proposal to have MIGA serve all MDBs is welcome, but it is more likely to work well if MIGA is made into an independent agency with capital contributed by all MDBs.

Systematize risk sharing. In the past two years, MDBs have taken advantage of risk sharing arrangements, within and across institutions, to leverage available resources for sovereign lending, without cost to shareholders. There are significant opportunities across the entire system for such arrangements. The EPG should recommend that by the end of 2019, the MDBs come up with a proposal for system-wide risk sharing that would increase lending authority by tens of billions of dollars, without any capital injection.

Provide each MDB/RDB with additional flexibility to move beyond its geographic mandate if such a move can add value to the system as a whole. Given regional mandates and needs, many of the MDBs have developed subject matter expertise that could be well used in other parts of the world. To realize economies of scale and scope across the system, shareholders should support the development of mechanisms to share best practices across the globe and to allow sister institutions to take the lead in their areas of subject matter expertise in countries outside their immediate geographic mandate.

Establish an inclusive systemic review mechanism. The EPG’s work has been useful in focusing attention on the systemic issues the MDBs/RDBs face. Such reviews should not be ad hoc, as the EPG preliminary report notes, but any permanent review mechanism risks creating another international bureaucracy. The EPG-proposed solution (a periodic joint report by the IFIs to the G20 and their own governing boards) seems too much of an insiders’ game, with not enough developing country voice, given the current governance structures of the IFIs. While the G20 could provide a way of ensuring the regularity and focus of the report, other voices need to be heard (development organizations that are not IFIs, civil society organizations, think tanks) and developing countries need to have a major stake in the process.

Appraising the executive boards. There is a widespread belief that the boards of the IFIs soak up too many resources and need reform. Broad reform is a major systemic undertaking—years of political wrangling. And the EPG preliminary report steers well away from any such undertaking. But the “true facts” aren’t on the table on a systemic basis. An in-depth look at the mandates, costs, and benefits of the various board arrangements would be a first step in thinking about reform. Just shedding some light across the system may be enough to spur some internal reform efforts.